Message #17 From:
NewsBot Date: November 15, 2006 06:00:00 AM
AXSI News AXCESS International Announces Third Quarter 2006 Results
DALLAS--(BUSINESS WIRE)--AXCESS International Inc. (OTCBB: AXSI), a leading provider of Radio
Frequency Identification (RFID) solutions and Real Time Location Systems
(RTLS), today reported results for the third quarter ended September 30,
2006.
Highlights for the Third Quarter Ended
September 30, 2006
Further Success Achieved in Physical IT Asset Management Solutions
Increase in Number of Signed Channel Partners
Senior Technical Staff Augmented
Set to Launch Marketing of New Technology
“AXCESS’ revenue
growth continued upward in the third quarter, with year-to-date revenue
eclipsing last year’s total revenue. We will
have record year-end revenue in 2006,” said
Allan Griebenow, President and CEO of AXCESS. Mr. Griebenow further
stated, “The RFID market continues to mature.
Our application for the management and security of physical IT assets
has been well received, exemplified by the announcement of a new world
class user, PriceWaterhouseCoopers. The accelerating loss of personal
privacy information and corporate intellectual property continues to
raise concerns and generate new legal mandates. Shortly after the
quarter closed, we introduced our revolutionary new technology, the
Enterprise DotTM. As the smallest, lowest cost
and most feature rich wireless System-on-a-Chip platform in the world,
AXCESS further extends its lead in RFID, RTLS, and wireless sensing
solutions.”
Corporate and Industry Developments
AXCESS provides complete RFID system solutions for improving
productivity and security in industry and government. These systems are
based on “active”RFID technology, where wireless “tags”
use on-board battery power to transmit signals from a few feet to
hundreds of feet in order to automatically identify, track, monitor, and
protect people, assets, and vehicles. Active RFID systems (as opposed to
passive systems which have no battery power on-board) enable flexible
implementations which can serve multiple purposes. AXCESS’
unique patented technology enables tags to wake-up on-demand as needed
to provide precise location determination and enable accurate and
reliable information for real-time decision making. The ability to have
tags always “on”
in a beaconing signal mode plus have the option to transmit their status
on demand is called “dual-active”
operation. AXCESS’ dual-active RFID is the
most economical and flexible solution on the market today. The recent
industry report by IDTechEx indicated active RFID solutions are growing
rapidly and will sustain 28% compound growth through 2016 and reach
$6.8B.
Overall, the awareness of RFID globally continues to grow with the
continued adoption of all types of RFID and RTLS technologies across
multiple industry segments including: the retail supply chain; vehicle
toll tagging; contact less payment systems; transportation ticketing;
security access control; military container tagging; and AXCESS’
enterprise solutions. Wal-Mart continues to mandate that more of its
suppliers use low cost, disposable passive tags for identifying cases
and pallets. In 2005, that awareness began to translate into increased
user demand for active (battery-powered) RFID and RTLS applications.
AXCESS believes it is developing its business into a distinct, exciting,
and large niche within the total market basket of RFID solutions.
The Company’s solution for the management and
protection of physical IT assets continues to be best in class.
PricewaterhouseCoopers was announced as a customer for AXCESS’
Dual-Active RFID solution for asset management and protection. The
solution prevents theft or loss of assets and data by offering
individual asset tracking and protection, dynamic wireless custodian
assignments to assets, complete reports, and wireless alerting to
exception-based security events. When an item is removed from company
premises without authorization the technology delivers actionable
intelligence through which a reliable security response can be
determined and initiated. PricewaterhouseCoopers identified the
potential for significant ROI by managing assets and by preventing
computer theft. In addition to preventing monetary loss associated with
the theft or loss of IT assets, the company recognized how AXCESS’
ActiveTagTM solution could empower them with
the ability to better protect their clients’
data through increased accountability and security.
In the area of personnel access control and tracking, the Company
announced the development of a partnership with Digital Defense Group, a
producer of biometric-based secure identity cards. Digital Defense has
integrated AXCESS’ ultra-thin long range
personnel card to transmit the industry’s
only long range biometrically activated digital certificate. IronGate™
biocard is a unique device that allows the benefits of highest level of
security with the convenience and high through-put capabilities of
active RFID. The impact of this integration allows for applications like
high security personnel and vehicle access through borders, industrial
and secured facilities. Utilities, transportation, IT, financial,
medical and manufacturing are just few of the industries mandating the
use of biometrics in their security procedures. The IronGate biocard
assures biometric privacy because the biometric is stored on the card.
During the quarter, the Company announced the signing of 34 partners in
14 different countries to their Global Business Partnership Program. The
results are a reflection of the enhanced partner development program
launched in Q3 2006 which enables systems integrators from disparate
backgrounds and worldwide locales to successfully sell, implement, and
maintain AXCESS RFID solutions for enterprise operations in multiple
industries. Driving the growth are integrators from industries such as
security, homeland defense, supply chain, enterprise management,
bar-coding and automatic identification who are bumping into the
limitations of passive RFID technology and recognizing the need for the
unique capabilities of Dual-Active RFID™.
Demand is high domestically and around the world including the Latin
America, Asia Pacific, and Middle East regions.
The Company continues to work on its next generation products based on
the demands of the market for smaller, lower cost tags and
infrastructure which also have multiple features and flexible operating
options. Just after the quarter ended, AXCESS announced a new,
revolutionary wireless tracking and sensing technology for 2007 called
The Enterprise Dot™. Based on a
System-on-a-Chip (SoC) design, the patents-pending technology yields the
world’s lowest cost and smallest
multifunctional wireless sub-micro device for delivering visibility
oriented data about the assets operating in and around the enterprise.
Devices built on the Dot™ platform will
enable widespread and reliable automatic identification, locating,
tracking, protecting and monitoring of personnel, physical assets, and
vehicles. DotTM facilitates the capture,
processing and delivery of previously unavailable real-time information
for dramatic improvements in supply chain visibility, mobile asset
management, physical asset security, access control, and industrial
condition monitoring. The low cost and flexibility to use existing
supply chain infrastructure results in a very low total cost of
ownership, yielding short term ROIs for customers. In an OEM package, it
is small enough to be embedded into a variety of things such as
computers, test equipment, medical equipment, credential cards, pallets,
and cartons.
Bringing together the new functions of the Dot™
and building on the current AXCESS wireless infrastructure for
enterprise management creates an open architecture for multiple sources
of data to be acquired to deliver previously inaccessible business
intelligence. AXCESS sees this as an opportunity to use its
time-to-market and technical advantages to serve an ever-expanding
market based on its core technology which has been optimized for the
exact needs of enterprise tagging. The DotTM
technology will extend AXCESS’ existing time
to market advantage. It further eclipses competing architectures such as
Wi-Fi based and battery-assisted passive RFID where size, cost, signal
robustness and power management are problematic.
The development of AXCESS’ intellectual
property portfolio continues in support of the ongoing product
development, market strategies, and to re-enforce competitive
advantages. These innovation and growth efforts continue to be supported
by our shareholder and key financial advisor Amphion Innovations plc.
Third Quarter and Nine Months of 2006
Financial Results
Revenue was $369,621 for the three months ended September 30, 2006, an
increase of 81% from the same quarter in 2005. Revenue for the nine
months of 2006 was $1,177,659, an increase of 80% from the same period
in 2005. The increase in revenue in the quarter and the first nine
months of the year is due to the Company gaining traction in the active
RFID market with new customers and add-on sales for products and
services relating to existing customers. Historically, AXCESS reported
revenue from its RFID and video businesses. Following the sale of the
video patent portfolio in the first quarter, the Company is generating
and reporting revenues only from its RFID operations. Add-on sales that
are considered by the Company to represent a form of recurring revenue
was 25% of total sales in the third quarter 2006 and 20% for the first
nine months of 2006.
Gross margin was 47% or $172,242, in the third quarter 2006 as compared
to 46%, or $94,914, in the 2005 period and 44% or $516,435, in the first
nine months of 2006 as compared to 45% or $294,998 in the nine months of
2005, reflecting an improved sales mix and benefits of manufacturing
leverage. AXCESS outsources the manufacturing of all of its proprietary
and patent-protected RFID system components.
Research & development (R&D) expenses for the third quarter totaled
$245,888, compared to $177,221 in the year-ago period and $1,109,476 for
the first nine months of 2006, compared to $569,141 for the same period
in 2005. The increase in R&D is due to the timing of the development of
the next generation RFID product which will continue to be expensed over
the remainder of this year and into next year.
Selling, marketing, general & administrative (S, M, G &A) expenses for
the third quarter totaled $735,848, as compared to $579,038 in the prior
year period and $2,265,310 for the first nine months of 2006, as
compared to $1,815,136 for the nine months of 2005. The majority of the
increase relates to non-cash costs associated with expensing of stock
options from current and prior years, and certain public company
expenses. Increased spending for sales and marketing initiatives
primarily reflect the expanding direct sales strategy implemented during
the past several months, including higher advertising, personnel and
travel costs.
Other income (expense) for the third quarter of 2006 totaled ($59,651),
as compared to ($118,641) for the same period in 2005 and $400,398 for
the nine months of 2006 compared to ($356,562) for the nine months of
2005. The majority of the improvement relates to the gain on the sale of
the video patents and the lower interest expense resulting from lower
debt balances and the completion of the amortization of the fees.
Net loss for the third quarter of 2006 was $873,608 as compared to
$785,720 in the prior year quarter and $2,471,533 for the nine months of
2006 compared to $2,468,559 in the nine months of 2005. The increase in
the net loss is a result of the expenses of stock options that began in
2006, the increase in research and development for the next generation
RFID product and increased selling and marketing activities offset by
increased gross margins, the sale of video patents and lower interest
expenses.
Recurring preferred stock dividend requirements for the third quarter of
both fiscal 2006 and 2005 were $81,735 and $243,428 for the nine months
of both years. AXCESS also recorded a one-time dividend of $645,020 for
preferred stock issued in the second quarter 2006, $1,489,245 for
preferred stock issued in the first quarter of 2006 and $2,060,397 for
warrants issued during the first quarter of 2005.
Net loss applicable to common stock for the 2006 third quarter was
$955,343, or $0.03 per share, compared to a loss of $867,455, or $0.03
per share, for the third quarter of 2005 and $4,849,226 or $0.17 per
share for the nine months of 2006 compared to $4,772,384 or $0.18 per
share for the same period in 2005. The difference in loss in the current
year period from the prior year is primarily attributable to the
preferred stock dividend requirements.
Financing
On November 9, 2006, AXCESS closed on a convertible loan for $140,000 of
additional working capital. The loan is from the Company’s
largest shareholder group, Amphion Innovations plc (AMP.L), a company
which creates, operates, and finances technology companies. These
investors have been encouraged by AXCESS position in the RFID industry
to capitalize on existing and more substantial emerging opportunities.
The loan is anticipated to be converted into shares of preferred stock
bearing no dividends and warrants to purchase the Company’s
common stock exercisable for five years at $1.50 per share during the
fourth quarter of 2006 as long as the company is able to close on a
preferred equity offering of at least 700,000. The loan bears interest
at 10% and is due on December 31, 2006.
Conference Call
In conjunction with the third quarter earnings release, AXCESS invites
you to listen to its conference call today, November 15, 2006, at 4:30
p.m. (Eastern). To participate in the call, domestic callers can dial
(866) 356-4441 and international callers can dial (617) 597-5396 and
enter the reservation code “97030132.”
Participants should dial into the call about 10 minutes prior to the
start time.
For those unable to attend the live conference call, a replay will be
available by dialing (888) 286-8010 for domestic callers and (617)
801-6888 for international callers and entering the replay code “17971628.”
The replay will be available from approximately one hour after the end
of the call until 11:59 (ET) on December 15, 2006. There is no charge
for participants to access the live event or replay. The conference call
and replay dial in information is also available on AXCESS’
website at www.axcessinc.com.
About AXCESS International Inc.
AXCESS International Inc. (OTCBB:AXSI), headquartered in greater Dallas,
TX, provides Radio Frequency Identification (RFID) solutions and Real
Time Location Systems (RTLS) for asset management, physical security and
supply chain efficiencies. The battery-powered “active”
and “semi-active”
(on-demand) RFID tags locate, identify, track, monitor, count, and
protect people, assets, inventory, and vehicles. AXCESS’RFID solutions are supported by its integrated network-based, streaming
digital video (or IPTV) technology. Both patented technologies enable
applications including: automatic “hands-free”
personnel access control, automatic vehicle access control, automatic
asset management, real time location determination, and sensor
management. AXCESS is a portfolio company of Amphion Innovations plc.
This release contains forward-looking statements as defined in Section
21E of the Securities Exchange Act of 1934, including statements about
future business operations, financial performance and market conditions.
Such forward-looking statements involve risks and uncertainties inherent
in business forecasts.
AXCESS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Unaudited) September 30, 2006
December 31, 2005
ASSETS
Current assets:
Cash and cash equivalents
$
238,050
$
236,869
Accounts receivable - trade, net of allowance for doubtful accounts
of $17,095 and $17,389 for 2006 and 2005, respectively.
189,765
141,200
Inventory, net
472,309
112,270
Prepaid expenses and other
123,608
72,628
Total current assets
1,023,732
562,967
Property, plant and equipment, net
20,675
29,387
Deferred debt issuance costs
211,204
337,926
Other assets
3,096
2,699
Total assets
$
1,258,707
$
932,979
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$
181,386
$
252,155
Accrued liabilities
1,082,133
959,149
Notes payable:
Convertible notes payable (includes $80,000 with related parties in
2005)
—
396,666
Discounts on convertible debt
—
(5,520)
Dividends payable
56,859
208,780
Total current liabilities
1,320,378
1,811,230
Notes payable to stockholders
3,365,500
3,709,071
Total liabilities
4,685,878
5,520,301
Commitments and contingencies (Notes 1 and 2)
Stockholders’ deficit:
Convertible preferred stock, 10,000,000 and 7,000,000 shares
authorized in 2006 and 2005, respectively
With liquidation preference; no shares issued and outstanding in
2006 and 2005, respectively;
—
—
Without liquidation preference; $0.01 par value, 6,323,550 and
3,371,495 shares issued and outstanding in 2006 and 2005,
respectively
63,235
33,715
Common stock, $.01 par value, 70,000,000 and 50,000,000 shares
authorized in 2006 and 2005, respectively; 28,657,313 shares issued
and outstanding in 2006 and 27,437,111 shares issued and outstanding
in 2005
286,573
274,371
Shares of common stock to be issued, 5,333 shares as of December 31,
2005
—
53
Non-voting convertible common stock, $.01 par value, 0 and 2,250,000
shares authorized in 2006 and 2005, respectively; no shares issued
and outstanding in 2006 or 2005
